In case you haven’t seen it yet, I recently wrote and article on The Black Swan by Taleb. In the book, Taleb argues that we are all terrible at predicting the future. That there are game-changing events that happen often enough to alter the course of history or at least the economy.

Taleb argues that everyone, everywhere is bad at projecting the future. That economists and analysts are equally terrible at projecting what the S&P will look like in 12 months. I think the same applies to commercial real estate. When we run analysis on an IRR or the projected returns for a given deal, we have to assume vacancy rates, rental rate increases, exit caps, and half a dozen other assumptions. How often to we get them exactly correct? I would guess almost never. You may guess the exit cap correctly, but the rental rates haven’t trended upward like you thought. Or you may get vacancy right on the nose, but you miss on the TIs your projected for your industrial users.

Do you see the point? Projections and IRRs are basically just educated guesses. Once you start to think these numbers are written in stone or are in any way certain, you are inviting trouble.

So, as a deal-maker and CRE pro, how to you build this lack-of-precision into your analysis?

My answer is simply “salt.” Take every number and projection you get with a grain of salt. I learned in loan originations that you can make numbers say whatever you want, so assuming that numbers are ironclad or exact is fallacy. All of those projections and return numbers you are looking at have about 10 assumptions that go into spitting out that number. Put another way, to make 1 number true, you have to assume that 10 other numbers are also true. What do you think is the chance that all 10 of those numbers are 100% accurate?

Probably not very high. Right?

So, I’m not suggesting to do away with IRR projections or cash-on-cash return numbers in your analysis. What I am saying is that you should understand that these numbers can vary by 50% or more. So your projected 20% IRR has a serious chance of ending up a 10% IRR (or, conversely, a 30% IRR).

The point is, IRR and Cash-on-cash numbers are comparative not absolute. That is, they can be used to compare projected returns against the same property type in the same basic location, but I would caution against comparing across property types, locations, and certainly against other investment vehicles. You CANNOT compare a 10% return on mutual finds to a 10% return on a shopping center acquisition.

As long as you keep that in mind, then IRR and C-o-c projections are fine. But as soon as you start expecting exactly 16% on your money from a projected 16% IRR, you are asking for trouble. Or if you try to pitch your office development as a 15% IRR that compares to the 7% investors are getting in the S&P, you have missed the point of comparative analytics.

So, to paraphrase Taleb, all of us, no matter how educated or intelligent, are terrible predictors of the future. As long as we understand that and build that into our assumptions and our interpretations of models, then we should be able to save ourselves headaches and heartbreaks.

I will continue on Black Swans later on in the week, but for now, stay skeptical of numbers!

We all have roughly the same amount of time. Whether you work 8 hours a day or 16, you still have to push to accomplish everything you want to accomplish every day. The man who is most efficient with his time will find he achieved more than his peers.

So, with that in mind, here are 5 free (or nearly so) tools for you to increase the efficiency in your day.

Evernote

Free Note-taking and recovery software for multiple devices

Evernote is a great free tool to keep track and be able to recall important documents, websites, emails, or other important information. You basically just install the software (inluding plugins for browsers and email), clip the notes you want to keep, tag them, and then Evernote will save them for later recovery. When you want to find them again, just type in some keywords into the search function of Evernote and it will recall and display all of the notes you tagged with those specific keywords. So you can probably see why this is a great tool for keeping hundreds, or even thousands, of notes on various topics as long as you tag them appropriately.

Dropbox is a great way to take all of your documents with you. You simply install the free software onto all of your devices (including tablets and smartphones) and then save documents into your Dropbox. Dropbox then uses cloud computing to save the document on your shared space and you can access that document from any device that has Dropbox. It is a great tool for keeping contracts, surveys, legal docs, or plats on your iPad when you visit a site.

As with most things from Google, this free software is better and easier to use than its pricey counterparts. My Maps is an extension of Google Maps where you can customize a map by putting routes and place-markers on certain areas, properties, or submarkets. It allows you to place a marker on a given property and then attach notes, pictures, or other rich text to that marker. So you can probably see why this would be a great tool for tracking property, deals, submarkets, or anything location-specific.

How to get it: Visit Google, click on “maps”, click on “my places”, and then click create map”. From there, the world is your (data) oyster.

CoStarGo

Mobile access to your CoStar account

If I have to tell you what CoStar is or why you may want it with you when you are not at your desk, then please call me about some swamp land I have for sale at a great price!!!! ACT FAST!

How to use it: It is the same as regular CoStar, more or less, but they do have a fancy slideshow.

How to get it: You have to have a CoStar subscription. After that, just download it to your mobile device.

Office 365

Cloud Computing for next-to-nothing

Office 365 is a great cloud computing option for the budget conscious professional with limited needs. At $6 per month per user, 365 offers most of the functionality of larger and more complicated clouds, but at a steep discount. And if you are, like most of us, very familiar with Office products, usability should be straight forward. Clouds are a great option for storing all of your information and documents on a server than can be accessed from any computer in the world, and are still secure enough that you can feel safe that your confidential documents won’t be hacked.

So, those are 5 free or cheap options to increase your flexibility, mobility, agility, and get-it-done-ility. These will help you become more efficient with your time and ultimately more accomplished in your deals.

If you have any additions or feedback to the above list, feel free to post in the comments below.

Just as a heads up, I am currently working on articles about Black Swans, Bankruptcy in CRE, More on Goals, and Interviews.

Stay tuned.

For now, stay random.

1. It is amazing to me the number of ways people can hide money and shelter their assets. What a cool and intricate little niche of the finance industry.

2. I think Toco Hills is an under appreciated retail market. Is there any inline vacancy is that submarket?

3. If I could live in one place in the world that is not the US, it would be Luzern, Switzerland.

4. Why are dumb people often the loudest people? Is there an inverse relationship between volume and intelligence?

5. What habits would the perfect man have every day? How would he spend his mornings, evenings, and work time? When would he exercise? What would he read? Hmmmmm . . .

6. Who is John Galt? (Give me a couple weeks and I will tell you as I finish Atlas Shrugged).

7. If you aren’t taking a small step every day toward achieving you goals in your career, then you need to come to terms with the fact that you will eventually be passed by those of us who are.

8. I think one of the greatest assets of Atlanta is the density of trees. Have you ever flown into Hartsfield from out west and just looked out the window as you landed back here? We have one of the most wooded cities I have ever seen from the air. That’s pretty cool to me and I think it is worth preserving.

9. I have no opinion on JoePa.

10. “In the beginning you make your choices. In the end your choices make you.” – Darren Hardy.

If you are going to build a world-class city from raw land, where do you start?

Tough question.

I think you start with problems. I would ask “What are the problems facing this hypothetical city and how can we use design and smart construction to solve them?”

And if you are going to truly create an exceptional city that is the model of new urban design, you cannot limit yourselves to the current problems facing the city. Let’s break it down this way:

What problems has this city/region/area faced in the past that have been overcome and how did they overcome them?

What problems are currently plaguing the city and how would a better-designed city solve those problems?

What potential problems will this city (and all cities) face in the future that can be avoided or minimized through intelligent planning?

To paraphrase Andy Stanley: “Given its past experiences, current circumstances, and future hopes and dreams, what is the ideal layout and design of this city?”

Hmmmmm

Let’s start with the low-hanging fruit and work from there. What are our current problems and how can design solve them?

As I see it, Atlanta’s three major issues are: transportation, water, and education. At least two of those are addressable by smart urban planning and the eduction will follow since smart people will want to live where there is great transportation and clean water.

I’m not going to get into transportation and water solutions just yet, but I think the important message to take away from this part of the thought experiment is that we need the help and expertise of water management and rapid transit professionals. Fresh water sources and the intricacies of rapid transit are not my area of expertise. We need outside counsel.

So, jumping back to 30,000 feet and just as a heads up for future editions of this series, I plan on tackling this project as follows:

1. Figure out Atlanta’s problems or shortcomings and devise a plan to fix or preempt them.

2. Figure out what experts and industry leaders would be best qualified to answer those questions.

3. Interview them.

4. Extensively.

5. Design the new urban frontier based on their suggestions and recommendations.

6. Find a way to sketch or model the new city layout and design.

7. Share it with whoever is interested.

Maybe nobody will be interested. But I am interested and this seems like a fun way to get to talk to some very intelligent people about our fair city. I plan on having fun with this.

I am certainly open to any suggestions about how to tackle this project, ideas to consider, experts to consult, ways to make it readable, or whatever. Feel free to leave comments or feedback below.

If you want to get somewhere, you first have to define where that somewhere is.

Seems simple enough, right? Well, in my experience, very few people intentionally design a career path with this is mind.

I can’t realistically speak to the goals of others, but I could see how a young man or woman would simply tell themselves that want “to be successful” or “to be well-respected.” Ok, that’s all well and good, but what does that look like? What do successful people look like? What kind of life to those you respect lead?

If you want to know which way to go from here, you have to figure out where you want to end up. So . . .

Where do you want to end up?

When you are 80 years old and looking back at your career, what would you like to say you have accomplished?

What types of deals would you like to have completed?

What kind of money do you want to make?

Where do you want to be?

I know these seem like overly simplistic questions, but they are CRUCIAL to your journey in setting out career goals.

The most influential question I asked of myself was: What do I want my lifestyle to look like in X years and how do I work now to get there from here?

You will have to decide that answer for yourself. But, if it will help you to formulate your goals, I will gladly share mine.

Simply put, in my 40s and 50s, I want to have the financial freedom to do whatever I want. If I want to watch my kids’ soccer game, I can because I don’t need to go into the office to earn a paycheck. If I want to take a month to live in Zagreb, no problem. Of course, I will still be heavily involved in CRE and will be aggressively pursuing deals, but a couple lean years in deal flow will not prevent my family from eating. My theory is that people who work because they want to work will blow the doors off of people who work because they have to work.

That is where I want to be in 20 years. How do I get there from here?

Simple. Passive income.

Passive income is getting paid without doing any work. It’s counterpart is active income: income you have to work to obtain. The difference is between the baker and the musician.

A baker wakes up every morning and bakes rolls and pastries. Whatever he sells, he gets to keep the profit.

A musician goes into a studio, records a song, and then collects royalties off of sales and downloads for the rest of her life. Madonna still gets income every week from songs she recorded 25 years ago.

I want to be the musician. Work hard up front and let your work keep paying you over the years to come. I would be very disappointed in myself if I woke up at 45 years old and realized that I killed myself in my 20s and 30s at work just so I can go and kill myself at work in my 40s and 50s. I can push myself and stretch my limitations now so that when I have kids and I have reached my peak earning years I have passive income to show for all of this work.

Anyway, we don’t need to get too deep into my goals, but I did want to give you an example of how to connect the dots. Knowing that I am seeking passive income, a role in brokerage would not be the right fit for me. I love making deals and networking is probably my favorite part of this business, but waking up broke every morning as a broker would not fit into my lifestyle plan (more on that later). I need to stay on the principal side of the business and try and get myself pieces of deals as an owner/manager.

So, where do you want to be in 20, 30, 40, or 50 years? What do you want your lifestyle to look like?

Figure that out, write it down, and start sketching out a path you want to take to get there. It may not be quick or easy, but I can promise you that those who start out with some general direction will end up miles ahead of those out for “success” or “respect.”

Make sure the road map to your career has a destination and some interesting stops along the way. If you do that, you will blow by all of your peers who are just trying to figure out where they are going or just trying to get anywhere quickly.

It was great and I will include a review later, but for now I want to work the theme into my random thoughts for the week.

1. The basic idea of TBS is that we oversimplify risk and everything else in life. In retrospect, to reduce any situation to a single equation seems a little ridiculous.

2. The Falcons aren’t nearly as good as they were last year.

3. I had someone tell me that the retail market in Atlanta may NEVER recover to the level we saw in 2005. Is that good or bad?

4. I don’t think an MBA does much for the CRE professional unless he plans on working for a ritzy equity fund or REIT. I know just as many non-MBA CEOs and fund managers as I do MBAs in the same position. When I call you to discuss a deal, I could care less where you got your MBA. I care a great deal about how much you know about this deal, the submarket, and the financing climate.

5. There are two kinds of people in this world: 1) people who like dogs and 2) idiots.

6. Why is Post building apts downtown? I know Stockert and the team at Post are much smarter than me, but are there a lot of white-collar, young professionals who want luxury apartments downtown? I would love to get my hands on that demand/feasibility analysis.

7. I have mentioned the ability to have two of the following three in any deal: Speed, Accuracy, and Cost Control. I think, as my career evolves, I will go for Accuracy and Cost Control. If I lose a deal because I am too slow, so be it.

8. Is anyone ever going to buy the Clermont Hotel?

9. I think I want a subscription to Atlanta Magazine. The restaurant reviews in the back alone would be worth the cover price.

Alice: Would you tell me, please, which way I ought to go from here?The Cat: That depends a good deal on where you want to get toAlice: I don’t much care where.The Cat: Then it doesn’t much matter which way you go.

– Alice in Wonderland

So, you have figured out who you are and what you are best at doing. Great!

From here, let’s figure out where you are going.

If you are going to have any semblance of direction or purpose to your career you need to make and WRITE DOWN your goals. Having a specific destination and pre-determined set of goals will give you a clear sense of purpose that will propel you ahead of all of your competitors.

Think about it at the most basic level. Which of these two people would you expect to find success over the next year . . .

I’m betting on Person 2. They have a clear goal and a sense of purpose. In terms of deals, I don’t even know what Person 1 wants or how they want it.

From here, Person 2 can put together intermediate goals by quarter, month, or week and can check her progress on each of those goals at intervals. They can figure out what the investment climate is for self-storage and what type of debt is available for self-storage acquisitions. They can choose target markets and submarkets, network with self-storage brokers, and target specific properties to purchase. All of that road map came from a single well-written goal.

I don’t have any idea what Person 1 is looking for.

So, let’s say you believe me on the importance of setting and writing down your goals. Here are a few tips I have learned over the years for writing aggressive and useful goals:

1. Be as specific as possible

2. Set goals that are quantifiable

3. Err on the side of over-aggressive

4. WRITE them down

5. Share them with someone

6. Check on them and update them often

I will dive deeper into each of these topics in the coming days, but for now the takeaway should be:

If you don’t set good goals, you will never maximize your potential output and income. At least give yourself a direction to charge off toward. Even if that ends up being not quite the right direction 99 times out of 100 you will find yourself closer to your final destination than you would have otherwise.

I love people. I love chatting. I find other people infinitely interesting and almost always enjoy my time getting to know someone new.

But I don’t love writing thank-you notes.

I know it is odd to hear that I don’t enjoy writing when you are reading something I wrote, but understand the distinction. These posts are opinions, reasearch, theory, ideas, and generally just interesting topics that I enjoy discussing. A thank-you note is redundant to me.

Let me explain why . . .

I pride myself on being extremely honest with other people. If I tell you something is true, then you better believe that I mean it or sincerely believe it to be true. At the end of the day, when you look back on your career, all you really have is your reputation. And I want my reputation to be that of someone who is honest to a fault.

So, when I say to you: “Thank you for meeting with me today. I appreciate your time,” I mean it. I ‘m not just saying it because I am supposed to say it. I’m not saying it because people think I should. Like I said above, I genuinely enjoy meeting other people and I do appreciate their time. So I really do mean “Thank you for your time.”

The fact that I am supposed to write a thank-you note to express how overwhelmingly grateful I am for someone’s time undermines that principle. Writing a thank-you note is like saying: “When I looked you in the eye and thanked you for your time, I didn’t really mean it. Now that I am taking the time to write something out and mail or email it to you should show you how serious I am in thanking you. I didn’t mean it before, but I mean it now.”

Do you see how that undermines the eye-to-eye handshake and heartfelt thanks I gave at the restaurant or coffee house? If I meant what I said, then I shouldn’t need to write a thank-you note. My highest level of honesty and sincerity is in the word I give you face-to-face.

So, I say all of that to say, I think thank-you notes are a shade above pointless if you realize that I sincerely mean what I say.

Having said that, thank-you notes are still a good practice. For people who don’t know you, it can reinforce your sincerity and (much more importantly) can make them feel important. That is People Skills 101. Make people feel important and they will run through brick walls for you.

Think about the mail you get. Do you get excited to get mass-mailings and generic pamphlets? Or, do you get excited to get that personal note or card from a friend or family member? Probably the latter.

So, disregarding the issue of sincerity, thank-you notes can be an extremely effective tool for making others feel important and creating lasting business relationships.

Given that thank-you notes are a necessary evil, here are my tips on the best and most effective ways to create your thank-you notes:

1. Write them the day of the meeting. The info and conversation is still fresh. Don’t put it off or you may forget.

2. Use a template. Most of my thank you notes say the same thing with a few of the details and personal comments changed per our conversation. Save time by keeping 80% of each letter the same and personalizing the remaining 20%.

3. Type it. This applies to those of us with poor handwriting. I know its a cute idea to hand-write notes to people, but often times that is just punishing the poor reader by making them read your chicken scratch. Save them the headache and yourself about 20 minutes per note. Type that junk.

4. Sign it. The only time your pen needs to touch the paper is for your John Hancock. Print off the note and sign your name in pen.

5. Snail mail it. You and I both know that letters are more meaningful and memorable than emails. Take the time to buy a stamp and enevelope and send it off by mail.

A few final thoughts for you on TY notes:

Know your audience. Not everyone cares or even wants a TY note. Don’t waste your time sending them to people who don’t want them. Many of us in Gen Y and Gen X could care less about thank-you notes and you can come across as stiff or overly formal if you send one after every casual encounter.

Having said that . . .

When in doubt, send a note. It is always better to err on the side of making someone feel important.

And finally . . .

If you happen to be meeting me, don’t send me a thank-you note to follow up. I trust that you mean it when you say it was nice to meet me. If you don’t mean it and I find out that you were being insincere, then we won’t do any business together anyway. So you won’t have to worry about maintaining our relationship. Save a tree and save yourself some time. I always prefer a sincere handshake over a note.

Part of knowing yourself is knowing how you are most effective and efficient with your time.

Hopefully, when you enter the CRE business you have some type of work experience or at least some experience doing large quantities of work in college. If so, think about the time and circumstances in which you were most effective in accomplishing your work or study goals.

Are you most productive in the morning? Do you wake up with your hair on fire and find that you tend to accomplish 80% of the day’s work before lunch?

Conversely, do you tend to put your most difficult task at the end of the day when you are the sharpest? Are you a late riser that has trouble getting going?

Do you work best in short bursts or in long benders? When you studied in college, did you study for an hour at a time every night or did you study for 8 hours straight one day?

All of these habits are clues to how your are most productive and efficient with your time and if you want to stand out as excellent in our business, then you need to play to your strengths.

In my case, I am most effective in short bursts and I tend to accomplish the majority of my work before lunch. So I have structured my day into three short working segments and I have organized my tasks according to time of day. So, on a typical day:

I work on my larger and more computer-intensive project between 7 am and Noon. These task are emails, models, research, organizing, etc. These are all computer-facilitated activities that require me to be sitting in front of my computer.

Then, I break for lunch, clear my head, and get focused on my next short burst of work. This lunch stretch usually runs from 12 to 2 pm and I don’t necessarily have to be networking or even sitting down for lunch. I may just go let my dog out or run errands, but I always to something to clear my mind and cleanse my intellectual palette. That way, I arrive back at my desk fresh and ready to power through the next few hours of intense work.

The next stage of my day is usually more focused on deal-making and networking. This is where I am on the phone, visiting property, driving markets, or doing something other than staring at my computer. I accomplish a great deal of “relationship” work in this period and can be more effective in my people management than early in the morning. This stretch usually lasts from 2 to 6 pm.

The next stage of my day is time with my lovely wife. She and I will have dinner, talk about our day, walk the dog, or whatever. The point is that my focus is completely on her and completely OFF commercial real estate. This is another mental cleansing session and brings me back to my work re-energized.

The final work stage of my day is the period before I go to bed. This session is from 8 to 11 pm or 9 to 12 pm. I use this session to get organized, send some easy emails, write my goals and plans for tomorrow, and do some fun research. This is my “fun” or “entertaining” work. I always enjoy the work in this session and tend to go to bed in a good mood and state of mind. That allows me to rest easy, recharge, and wake up ready to set the world on fire again at 6 am.

With the above schedule, I can get 12 hours of work in every day (13 if my lunch is a networking lunch) and feel like I accomplished a great deal of work. But since I broke the hours up into smaller slices, I never got bored or fatigued and maintained my effectiveness throughout the day. That is what works best for me.

The point of me sharing that schedule with you is not to imply that my schedule is universal or useful for everyone. Quite the opposite, actually. My schedule is tailored to my unique strengths and my ideal working conditions. As you can probably tell, I am most effective in short bursts and tend to accomplish my most complex and difficult tasks in the morning. I’m a “Morning, Sprinter.” You may be the opposite. You may be the marathon guy who needs to be at his work for 10 hours straight in order to accomplish major tasks. You may be a late riser who is most effective in the afternoon. If so, don’t get into the office at 6am. Roll in at 10 when you have had time to wake up and clear the fog out.

The way I see it, there are four types of workers:

“Morning, Sprinter” – Most alert and active in the morning. Works best in short bursts.

“Morning, Marathoner” – Most alert and active in the morning. Works best in a long, concentrated period.

“Afternoon, Sprinter” – Most alert and active in the afternoon. Works best in short bursts.

“Afternoon, Marathoner” – Most alert and active in the afternoon. Works best in a long, concentrated period.

Which one are you?

However you are most effective is extremely important when you are structuring your work week and daily routine. If you don’t know how you are most effective or when you accomplish the majority of your work, then you will just aimlessly wander through the work day. You will just sit at your desk from 9 to 5 (or 8 to 6, the American way) and plug away at whatever task is put in front of you. You will sacrifice productivity and appear less capable as a worker. You are trying to fit a square peg in a round hole and that is never a recipe for success. Many successful people do well IN SPITE of structuring their day poorly. Imagine what they could accomplish if they structured their days effectively . . .

So, can you see why knowing your most-effective structure and peak-performance periods is crucial to success?

To summarize, you should know when and how you work best and structure your day around your strengths. Most people will do the opposite and try and fit their talents and efficacy into the prescribed work schedule. If you can find a way to tailor your work schedule to your talents and maximum-effectiveness, you will have a leg up on 90% of your competition.

This one is the grandaddy of them all. Along with Graham’s Intelligent Investor, this book serves as the foundation of better business practices. In its pages, Carnegie deals mostly with human psychology.

He assumes that your goal is to be liked, trusted, and respected by everyone that you encounter. He further assumes that you want to positively influence everyone around you.

Working with those two assumptions, he constructs a framework of business and life practices that will maximize your influence on others.

One of my favorite tidbits is his stance on criticism. He opines that criticism and argument are useless and a waste of time. He says that criticizing someone doesn’t make them see things your way or admit their error and beg forgiveness, but rather causes them to get defensive and justify their actions.

Likewise with arguments. How many arguments have ended with one party saying “You’re exactly right and I am exactly wrong! How could I have been so foolish?”?

Probably none. That’s because people always think they are right, innocent, and justified. No one thinks themselves to be wrong, stupid, or mean. If you view them as such, then you will have trouble ever convincing them of anything (like to work hard to make you look good in business!).

Those are just a couple examples of the useful and universal tips that Carnegie offers to anyone and everyone who desires to influence others. That, presumably, would be everyone.

I will caution you that this book was originally published in 1937 and can seem quite dated at times. In fact, some of his analogies and anecdotes are almost funny because of how often he references prominent figures from the 1800s, Civil War, and earliest Hollywood.

Try not to focus on whether you recognize all of the names and places he references. Instead, figure out the lesson he is teaching with those examples.

Much like Good to Great, I won’t go as far as saying that you MUST read this book in order to achieve business success. However, I will say that I highly recommend this book to anyone and everyone and I think I will be reading it at least once a year for the rest of my career in order to remind myself of its timeless principles.

*Note: My version of the book is the Audio CD version. I have listened to it in my car twice in the last month.